Indian firms struggling as over Rs 1.8 trn trapped in balance sheets: EY

Indian companies are struggling as they had more than Rs 1.8 trillion trapped in balance sheets, a report released by EY said. The firm found overall cash-to-cash (C2C) days deteriorated by 4 per cent in 2017-18, compared to 2016-17. C2C counts the number of days a business takes to convert its sales into cash. A higher C2C suggests cash crunch, which results in higher working capital requirements and leads businesses to increase short-term borrowings. The report said large firms have a better standing in terms of cash flows, as they are able to leverage their market reputation to secure better credit facilities from their suppliers, while mid-level and small firms are struggling. As a result, there is a difference of as many as 54 days between the C2C of large and small firms. Sector-wise, engineering and EPC services had the highest C2C rate. Most of the sectors showed some improvement in the first half of the financial year, compared to 2016-17.